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The Disciplinary Committee of Nasdaq Stockholm has found that Hexagon AB (“Hexagon”) has breached Nasdaq Stockholm’s Rule Book for Issuers (“the Rule Book”) and has therefore ordered Hexagon to pay a fine of SEK 6,210,000, corresponding to two annual listing fees.
The Disciplinary Committee concluded that Hexagon, in two respects, breached item 3.1 of the Rule Book. The violations relates to Hexagon’s disclosure of information in conjunction with the arrest of the company’s CEO on the afternoon of October 26, 2016 for suspected insider trading and, later on, the Court decision of detention of the CEO October 29, 2016. The company disclosed information about the events on the morning of October 31, 2016.
The Disciplinary Committee determined that the information concerning the arrest of Hexagon’s CEO on suspicion of insider trading constituted inside information for the company. The Rule Book, which refers to the EU Market Abuse Regulation (“MAR”)[1] regarding disclosure of inside information, states that the general rule is that inside information is to be disclosed to the public as soon possible. In an exception to the aforementioned general rule, MAR permits the issuer to delay the disclosure of inside information provided that the following three criteria are met:
- Immediate disclosure is likely to prejudice the legitimate interests of the issuer.
- Delay of disclosure is not likely to mislead the public.
- The issuer is able to ensure the confidentiality of that information.
The investigation showed that Hexagon decided to delay disclosure of the arrest and the suspicions raised against the CEO on October 26, 2016, based upon the assessment that the information available at the time was sparse, contradictory and likely to change. However, according to the Disciplinary Committee, the information the company received on the morning of October 27, 2016, a Nordic arrest warrant regarding the CEO, was sufficiently specific to determine that Hexagon’s legitimate interests would not have been prejudiced had the company disclosed that the CEO had been arrested on suspicion of an insider offence. The conditions for delaying the disclosure of the inside information was not met at that point of time, why the information should have been disclosed as soon as possible.
The Disciplinary Committee also found that the press release published by Hexagon at 08:15 CET on October 31, 2016, which contained information about the detention of the CEO, did not provide any information about how the company intended to address the fact that the CEO was under suspicion of insider trading or a plan for the day-to-day administration of the company in the absence of the CEO.
Given the surprising nature and severity of the situation in which Hexagon found itself and the challenge of applying the new Rule Book that entered into force on July 3, 2016, the Disciplinary Committee determined that the sanction should not exceed a fine of two annual fees.
A detailed description of the matter and the Disciplinary Committee’s decision is available at:
http://www.nasdaqomx.com/listing/europe/surveillance/stockholm/disciplinarycommittee/decisions/
Participating in the Committee’s decision were former Supreme Court Justice Marianne Lundius, Supreme Court Justice Anne-Christine Lindeblad, MBA Ragnar Boman, Company Director Carl Johan Högbom and Company Director Jack Junel.
